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An Audit of Palo Pinto County Municipal Water District No. 1

July 2026

Overview

The Palo Pinto County Municipal Water District No. 1 (District) is unable to complete the construction of the Turkey Peak Reservoir after taking on approximately $94.7 million in bond debt. Without the reservoir, the District's customers, including the City of Mineral Wells, may face water shortages.

The District followed its processes for collecting revenues and processing expenditures, complied with the Texas Water Development Board (TWDB) requirements, and mostly complied with statutory requirements.

PRIORITY

INSUFFICIENT FINANCING FOR TURKEY PEAK RESERVOIR PROJECT

The estimate of Turkey Peak Reservoir construction costs on which the District relied was significantly lower than the bids it received, and the District has paused construction indefinitely after taking on approximately $94.7 million in debt.

Jump to Chapter 1
LOW

REVENUES AND EXPENDITURES

The District followed its processes for collecting revenues and processing expenditures. However, the District should establish a process for promptly removing signatory authority when signers leave the organization.

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MEDIUM

COMPLIANCE WITH PROGRAM AND STATUTORY REQUIREMENTS

The District complied with the requirements of the TWDB's financial assistance program and with most Texas Water Code and Texas Government Code requirements. The District should implement processes and policies as needed to ensure full compliance.

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Contact Us

1501 North Congress Ave.
Austin, TX 78701
Phone: (512) 936-9500
Fax: (512) 936-9400
Email: auditor@sao.texas.gov
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